{"id":47889,"date":"2022-01-26T18:12:50","date_gmt":"2022-01-26T10:12:50","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=47889"},"modified":"2022-07-05T11:57:07","modified_gmt":"2022-07-05T03:57:07","slug":"rental-rates-peaking-six-year-high","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/rental-rates-peaking-six-year-high\/","title":{"rendered":"Rental rates peaking at a six-year high \u2013 What are the impact of cooling measures?"},"content":{"rendered":"
<\/div>\n

Property rental prices in Singapore have swelled to a six-year high and are expected to continue rising. Among the most affected by this increase are expatriates, who make up the majority of renters.<\/span><\/p>\n\n\n\n

According to URA\u2019s Q3 2021 statistics, the prices of private residential properties increased by 1.1% in the third quarter of 2021, compared with the 0.8% increase in the previous quarter. <\/span><\/p>\n\n\n\n

URA Rental Index of Private Residential Properties (Q3 2021)<\/b><\/td>Q1: 106.2 points (+2.2% QoQ)<\/b><\/td>Q2: 109.3 points (+2.9% QoQ)<\/b><\/td>Q3: 111.3 points (+1.8% QoQ)<\/b><\/td><\/tr>
Landed property<\/td>0.6%<\/td>1.4%<\/td>4.7%<\/td><\/tr>
Non-landed property<\/td>2.4%<\/td>3.1%<\/td>1.4%<\/td><\/tr>
Non-landed property (CCR)<\/td>2.9%<\/td>3.1%<\/td>0.7%<\/td><\/tr>
Non-landed property (RCR)<\/td>2.0%<\/td>2.8%<\/td>1.6%<\/td><\/tr>
Non-landed property (OCR)<\/td>2.1%<\/td>3.6%<\/td>2.6%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

(Source: URA 1<\/a>|2<\/a>|3<\/a>) <\/em><\/p>\n\n\n\n

From the table, it can be observed that every quarter has recorded a quarter on quarter growth in rental rates. <\/span><\/p>\n\n\n\n

Lack of housing options for foreigners<\/span><\/strong><\/h2>\n\n\n\n

Unfortunately, there is not much that expats can do to avoid the rental rate hike, as there are not many alternative viable options when it comes to housing. Most prefer to reside in private apartments for the amenities such as swimming pools, gyms, tennis courts, and the proximity to their offices in the city.<\/span><\/p>\n\n\n

\n
\"Artist's
Heading downstairs on a sunny weekend to lounge poolside? Yes please.<\/figcaption><\/figure><\/div>\n\n\n

Purchasing a home may not be something that many expats could consider due to the high ABSD rates for foreigners, especially with the recently updated cooling measures.<\/span><\/p>\n\n\n\n

Although the pandemic may have brought fewer foreigners to Singapore\u2019s sunny shores, it also meant that those already living here would probably extend their stay and renew their current leases.<\/span><\/p>\n\n\n\n

Singapore\u2019s current rental situation<\/span><\/strong><\/h2>\n\n\n
\n
\"condo<\/a><\/figure><\/div>\n\n\n

At the time of writing (26 Jan 2022), the average rental rate for condos stands at S$3.65 psf, down from the peak of S$4.07 psf in 2013. <\/span><\/p>\n\n\n\n

2013 saw the best rental rates for all regions island-wide, with the Core City Region (CCR) topping the board at S$4.95 psf. <\/span><\/p>\n\n\n\n

Year<\/b><\/td>Singapore S$\/psf<\/b><\/td>CCR S$\/psf<\/b><\/td>RCR S$\/psf<\/b><\/td>OCR S$\/psf<\/b><\/td><\/tr>
2013<\/td>4.07<\/td>4.95<\/td>4.03<\/td>3.19<\/td><\/tr>
2021<\/td>3.65<\/td>4.31<\/td>3.71<\/td>2.85<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The volume of rental leases being taken up across different regions has increased for the CCR and slightly for RCR since the start of COVID in 2020. <\/span><\/p>\n\n\n\n

Year<\/b><\/td>CCR<\/b><\/td>RCR<\/b><\/td>OCR<\/b><\/td><\/tr>
2020<\/td>24,282<\/td>28,116<\/td>33,010<\/td><\/tr>
2021<\/td>26,323<\/td>28,277<\/td>32,291<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Other reasons behind the increase in rental demand<\/span><\/strong><\/h2>\n\n\n\n

Increase in ABSD<\/span><\/strong><\/h3>\n\n\n\n

Prior to 16 December before the new <\/span>cooling measures<\/span><\/a> were introduced, foreigners purchasing a property had to pay 20% in <\/span>Additional Buyer\u2019s Stamp Duty<\/span><\/a> (ABSD). The amount has since been increased by 10 points to 30%, which could easily mean an additional six-figure sum payable for a prospective foreign buyer.<\/span><\/p>\n\n\n\n

Taking a S$1.5 million property as an example, here\u2019s how much more money expatriates would need to pay. <\/span><\/p>\n\n\n\n

Types of Buyers<\/b><\/td>ABSD from 6 July 2018 to 15 December 2021<\/b><\/td>ABSD on or after 16 December 2021<\/b><\/td>Additional ABSD in SGD<\/b><\/td><\/tr>
Singapore Citizens <\/span><\/b><\/td>First residential property<\/td>0%<\/td>0%<\/td>S$0<\/td><\/tr>
Second residential property<\/td>12%<\/td>17% (+%5)<\/i><\/td>+S$75,000<\/td><\/tr>
Third and subsequent residential property<\/td>15%<\/td>25% (+%5)<\/i><\/td>+S$75,000<\/td><\/tr>
Permanent Residents<\/b><\/td>First residential property<\/td>5%<\/td>5% (unchanged)<\/td>S$0<\/td><\/tr>
Second residential property<\/td>15%<\/td>30% (+15%)<\/i><\/td>+S$225,000<\/td><\/tr>
Third and subsequent residential property<\/td>15%<\/td>30% (+15%)<\/i><\/td>+S$225,000<\/td><\/tr>
Foreigners<\/b><\/td>Any residential property<\/td>20%<\/td>30% (+10%)<\/i><\/td>+S$150,000<\/b><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

This might mean that expats who were previously considering purchasing a home would likely reconsider and choose to pivot to the rental market instead to avoid the hefty ABSD tax. This collective choice may drive up demand for rental properties and, in turn, jack up the rental prices.<\/span><\/p>\n\n\n\n

Apartments that cost between S$2,500 to S$4,000 per month in rental are the ones that are likely to face the highest increase in prices, as they tend to have the most significant demand.<\/span><\/p>\n\n\n\n

Last year, some units saw an increase in rental costs of between 10% to 15%.<\/span><\/p>\n\n\n

\n
\n
\n

Units for rent<\/h4><\/div>\n
See all listings<\/a><\/span><\/div>\n <\/div>\n
\n
\n
\n FULLY FURNISHED<\/span>\n <\/div>\n
\n \"Leville\n <\/div>\n
\n
Leville Isuites<\/div>\n
28 Ceylon Rd \u00b7 D15<\/div>\n
\n
\n \"bedroom\"\n 2<\/span>\n <\/div>\n
\n \"bathroom\"\n 1<\/span>\n <\/div>\n
\n 581 sqft<\/span>\n <\/div>\n <\/div>\n
S$ 3,700<\/div>\n <\/div>\n
\n